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Hallmark Channels' Competitive Advantage? Red State Appeal

Hallmark Channels' Competitive Advantage? Red State Appeal

The nation's political divide expresses itself in many ways, including television preferences. A recent survey found that viewers in regions that backed Hillary Clinton prefer political satire and stories with darker themes, antiheroes and unconventional families, as reported by the Los Angeles Times. People in regions that backed Donald Trump are more likely to watch shows that express traditional family values and also to steer away from political themes and stories that denigrate religion.

A brief scan of the productions that get touted for Emmy Awards these days is a reminder that the entertainment industry's elite favors Clintonesque themes, from the dystopian "Handmaid's Tale" to the political drama "House of Cards," set in a decadent Washington, and the grim, futuristic "Westworld" — each earning best drama nominations.

Still, serving the Trump voter is turning out to be a big winner, as Crown Media's family networks, the Hallmark Channel and Hallmark Movies & Mysteries, have proved. Amid declining viewership and revenue at many TV networks, the Hallmark channels are on a roll.

In 2016, viewership for the Hallmark Channel was up 36%, while the Movies & Mysteries channel notched a 46% gain. The momentum continued into 2017, with a big payoff coming during November and December, when both networks show wall-to-wall Christmas movies, including dozens of new productions and favorites from the Hallmark archives. In mid-November 2017, the Hallmark Channel was the third most-watched network on cable television, averaging more than 2 million viewers per day. Only ESPN and Fox News did better.

Amid declining viewership and revenue at many TV networks, the Hallmark channels are on a roll.

Those Hallmark numbers stand in stark contrast with the dwindling viewership at other major channels in 2016. Revenues have followed ratings. In 2015, the last year before parent company Hallmark Cards Inc. brought Crown under private ownership, the media company's movie operations notched $478 million in revenue, a 15% increase over the previous year. The company says that ad revenues have continued to grow robustly since then.

Hallmark, of course, is no newcomer to television. Its "Hallmark Hall of Fame" series — which debuted on Christmas Eve 1951 — is the longest-running prime-time series in television history. The Hallmark Channel debuted in 2001 with 31 million subscribers. "In numerous studies, viewers have said they want compelling television programming that they can enjoy as adults and yet watch with other members of their household," the company said then.

Today, the Hallmark Channel has 89 million subscribers, and its Movies & Mysteries, which began broadcasting in 2004, boasts 67 million. In October 2017, the company launched its third channel, Hallmark Drama, as well as a subscription service for viewers who want direct access to the company's library of past productions.

Hallmark follows a strategy that once defined mainstream television. Its dramas and mysteries, for instance, are untouched by the violence and gore that characterize so much of crime TV these days. And Hallmark's romantic dramas have happy endings. Not surprisingly, the two networks do best with this programming outside the nation's major urban markets, where Clinton voters dominate. Viewership is up to 50% higher in smaller markets.

The company has pumped much of its growing revenue into original productions. In 2017, it aired an astonishing 89 new movies, produced exclusively for its channels, including 33 that debuted during the Christmas season — such as "The Christmas Train," a romance on a cross-country train ride, based on the best-selling book by David Baldacci. While other networks spend huge sums on original programming in pursuit of blockbuster hits, Hallmark produces a typical TV movie for about $2 million. By contrast, each episode of the final season of "Game of Thrones," the hit HBO series, will reportedly cost $15 million.

Hallmark fare, especially its holiday programming, has garnered a bigger and bigger following, even inspiring a bingo card game, in which players fill in the squares based on how a Hallmark movie's plot proceeds. Though fans on social media sometimes describe the channel's programming as a "guilty pleasure," life has a way of imitating Hallmark's romantic view of the world — as when American actress Meghan Markle, who starred in two Hallmark movies about a woman who finds her dream man in unlikely ways, became engaged to Britain's Prince Harry.

Until now, Hallmark's success has mostly been ignored by TV programming executives at other stations, which continue to court viewers with dark shows such as "Stalker," "Frontier" and"Emerald City" that they hope will follow up on the success of equally violent past efforts, such as "American Horror Story," "True Blood" and "The Walking Dead." Awards shows and critics typically follow suit, having little to say about Hallmark's programming.

Television producers are typically quick to emulate the latest success. But for many, apparently, Hallmark-style programming that appeals to red state residents is a bridge too far. The loss is theirs. Has any successful TV network ever enjoyed such a distinctive competitive advantage?